Life Insurance

No one really wants to hear about life insurance. But if anyone is financially dependent on you, it is a subject you should not avoid.

There are various types of life insurance plans, but ultimately, they all pay your loved one’s cash should you die. Life insurance money can be used to fund regular living costs, mortgage, or rent payments, unpaid debts, tuition, and other necessary expenses. It is the only way to guarantee that your loved ones are in a secure financial situation if you and your income are no longer in the picture.

You should get a life insurance if you fall under one of these categories: 

Married or partnered couples with kids

Many couples find it impossible to make the ends meet without the income of the other earner.

Married or partnered couples with kids

In addition to losing one partner’s wages, the remaining parent will have to pay for childcare.

Single parents

As your family’s primary income earner, you worry about ways to replace your child’s only source of financial assistance.

Stay-at-home parents

From cooking dinners to getting children to kindergarten to assisting with homework, stay-at-home parents carry out a range of important tasks that will be expensive to outsource.

Retirees

Depending on the value of your assets, your heirs will be struck by an estate-tax rate of up to 45%. Luckily, life insurance money allows heirs access to tax-free money to pay for emergency expenses and more.

Business owners

Life insurance will support the company in many ways if you, a fellow owner, or a main employee has died.

Types of insurance

TERM ASSURANCE

Term Assurance is a plan that guarantees a sum of coverage for a specific period of time. This is often 10, 20 or 30 years. Term life insurance makes sense when you need protection for a specific amount of time—for instance, until your kids graduate from college or your mortgage is paid off. This means that after the duration is over, you will again be given the same coverage for the same time. However, as you get older, the cost will increase. This feature makes this type of life insurance policy a good choice for those on a tighter budget.

WHOLE OF LIFE

This type of policy is for the whole of your life, not just for a specific term. It provides lifelong protection for as long as you pay the premiums. It also accumulates cash value on a tax-deferred basis, and can be used to finance a home, to fund your retirement income, to fund emergency costs and more.

Because of these added benefits, the initial premiums are higher than what you would have paid for a term life insurance policy with the same amount of coverage.

SERIOUS ILLNESS COVER

Serious illness cover pays a taxfree cash lump sum if you are diagnosed with any condition on a specific list of illnesses issued by the policy provider.

Serious Illness cover typically runs in conjunction with a life assurance policy. However, it is also possible to take out a standalone serious illness policy.

When we talk about serious illness cover, we refer primarily to heart attack, cancer or stroke. However, some products cover up to 44 illnesses such as Alzheimer’s disease, loss of one limb and Parkinson’s disease, to name just a few.

HOW OFTEN SHOULD I REVIEW MY LIFE INSURANCE?

As a general rule of the thumb, it’s a good idea to at least review it once a year or whenever a life change happens. A life insurance review will help you ensure that you coverage is at the right level to protect your loved ones. Life insurance often needs to be adjusted after a big change like getting married, having a baby, starting a business, retiring and more.